Insurance is typically viewed as a form of risk management, in terms of which there is a transfer of risk from an insured party to an insurer party in exchange for a premium. An insurer may be a corporation selling the insurance, while an insured (e.g., the policy holder or owner) is typically a person or an entity that is buying the insurance. An insurer charges the insured a premium, which is typically a once-off or recurring monetary payment from the insured to the insurer in exchange for the assumption of the risk by the insurer. There are many types of insurance, such as auto insurance, home insurance, health insurance, disability insurance, casualty insurance, life insurance, and credit insurance, to name but a few.
Life insurance (or assurance) is typically provided in terms of a contract between a policy owner and an insurer. The contract may obligate the insurer to pay a sum of money to a beneficiary specified by the policy holder upon the policy holder's death, terminal illness or catastrophic event.
The insurer typically calculates policy prices using mortality tables (i.e., statistically-based tables showing expected annual mortality rates). Main variables in mortality tables have traditionally been age, gender and use of tobacco.
Life insurance is often provided in two basic classes, namely temporary life insurance or permanent life insurance. Temporary life insurance provides coverage for a specified term of years for a specified premium, while permanent life insurance remains in force until the relevant policy matures or pays out.
U.S. Pat. No. 7,395,219 describes an “insurance on demand” transaction management system that implements an intermittent risk exposure liability insurance method. The method involves establishing an Internet business site enabled for communication between insurers and insured. Insureds are enrolled in intermittent risk exposure liability insurance policies. These policies provide a variable insurance premium rate depending upon an intermittent use of an insured article (e.g., a motor vehicle). The start and completion times of each intermittent use of the insured article are logged on the Internet business site by the insured. These start and completion times are verified. Premium insurance rates are applied and billed in accordance with the verified log start and completion times of use.
U.S. Pat. No. 5,839,118 describes linking an external computer with a system of an insurance carrier and a system of an independent lending institution to determine an optimal premium structure for a variable life insurance product, using a portion of a policy owner's money and a lending institution loan to finance a premium. The system provides for the tracking of several variable life insurance policy cash values to ensure each individual policy cash value is adequate for collateral purposes.